V Investment Contracts

Abstract

This chapter focuses on investment contracts. Since large-scale investments involve interests of the investor as well as public interests of the host State, general legislation of the host country may not sufficiently address the nature of the project and the kind of interests concerned. The legal setting of an investment may need to be adjusted to its specifics and complexities by way of an investment contract. The investment contract will reflect the bargaining power of both sides under the circumstances of the individual project. Depending upon the bargaining power and the negotiating skill of the parties, a number of possible choices have emerged for the law applicable to the contract and the agreement on dispute resolution. These range from a choice of the law of the host State to an exclusive choice of international law. The matter will also be determined by the position of international law in the domestic order of the host State. The chapter then looks at stabilization and renegotiation clauses and considers the relationship of investment contracts with investment treaties.